Healthcare Industry Report

The multi-billion dollar healthcare industry is complex and comprises several moving parts that are changing how medical services are delivered and how companies are being opened up to new opportunities, largely due to new technological advancements such as telemedicine and digital health. The sector is also being impacted by other factors, such as aging populations, changing reimbursement models, government healthcare programs, workforce shortages, and healthcare consolidation.

Market Segmentation

The healthcare industry is segmented into:

• Pharmaceuticals
• Devices
• Healthcare services, such as:

–   Medical and diagnostic laboratory services

–   Dental services

–   Home healthcare and residential nursing care services

–   Residential substance abuse and mental health facilities

–   Hospitals and outpatient care centers

–   Physicians and other health practitioners

–   All other ambulatory healthcare services

–   Ambulance services

By application, the industry is categorized by:

• Cardiovascular
• Oncology
• Anti-infection
• Central nervous system
• Respiratory
• Others

Key Market Trends & Drivers

The healthcare sector remains a highly dynamic and evolving landscape. Key trends investors will be sure to pay attention to include some of the following trends.

Artificial intelligence will be a transformative force in healthcare, allowing for more accurate diagnostics, personalized treatments, streamlined operations, drug discovery, predictive analytics, operational efficiency, cybersecurity, and more.

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Blockchain technology gives medical supply chains more transparency and traceability from manufacturers to patients. It can accurately identify mistakes, especially dangerous ones, in the medical field. It is also being used to detect deception and data manipulation in clinical trials.

Digital health, telemedicine, wearable health devices, electronic health records, health apps, virtual assistants, augmented reality, and AI-driven diagnostic tools are transforming healthcare and how patients interact with their care. These tools are improving the quality of care, increasing accessibility, and making caregiving more efficient.

Additive manufacturing, such as 3D printing, is being used to construct products in parts of the world where medical equipment is scarce. It can create tools on demand, such as surgical instruments, implants, and prosthetics. There is also ongoing research into the possibility of creating 3D-printed organs for transplants. This technology would use a patient’s own biological tissue to print a new organ to address transplant needs and costs.

More life science companies are moving into the direct-to-consumer space to offer new devices and pharmaceuticals such as GLP-1s. They are seeing the opportunity to cut out intermediaries and appeal directly to the consumer based on first-hand data that offers better insights into consumer experiences with certain products.

Mental health is venturing into urgent care clinics to address the rising demand for psychiatric care among children and adults, with hospital systems driving the force behind this trend. Among the most popular reasons for people seeking mental health urgent care are anxiety disorders, opioid dependence, depression, autism disorders, and post-traumatic stress disorder. Getting mental health care in traditional settings usually comes with long wait times, which is not conducive to addressing what is almost always an immediate problem, such as panic attacks and suicidal thoughts. Traditional settings, such as already-overwhelmed emergency rooms, are also not equipped to deal with the complexities of mental health crises.

Non-opioid therapies are changing the way pain is being managed with new pain management options involving new compounds, acupuncture, behavioral therapy, cognitive therapy, CBD, ketamine, psilocybin, and SSRIs.

M&A

The market is positioned for restructuring and consolidation through M&A deals, especially as a natural market correction from the digital health bubble that occurred during the COVID-19 pandemic. In today’s healthcare world, investors focus on tech-enabled services, software platforms, digital therapeutics and diagnostics, and sustainable economics versus overall growth. The pace of M&A is likely to see continued momentum in order to achieve integration with vendors, apps, and devices. Digital health companies are being acquired in order to avoid going under as consumers struggle to manage too many options and solutions.

Companies that are able to successfully integrate acquired technologies and attain interoperability at scale will be in high demand, have a major advantage, and garner high valuations.

The fundraising environment has been somewhat challenging, so more companies may struggle to raise more money and could use M&A strategies to stay in the market. 

Private equity firms are expected to continue to buy in on low valuations and acquire public health tech companies. And if interest rates continue to be cut, more digital health companies can be expected to buy out competitors and combine capabilities, leading to more complete solutions for the healthcare sector. 

Our Recent Success Stories in the Sector

Some of Benchmark International’s more recent successful deals in the healthcare space include:

The acquisition of Mideast Delivery Solutions by SPS Health

The purchase of Paramount Urgent Care, Inc. by HCA Healthcare

The transaction between O’Flynn Medical Limited and O’Flynn Innovation Limited to Healthcare 21 Ltd

The sale of Device Access UK Ltd to IGES Institut GmbH

The deal between Computer RX and RX30

The acquisition of Central Emergency Medical Services Inc. by Priority Ambulance owned by Enhanced Equity Funds

The deal between Transaction Data Systems and GTCR

The sale of Quadmed, Inc. to Bound Tree Medical, LLC

The purchase of B.L. Family Practice, P.A. by Med First

The transaction between Ultra Clean Systems, Inc. and Getinge AB

The deal between WeCareMD, P.C. and Physician Partners, LLC

The sale of Gem Drugs, Inc. to Vital Care Infusion Services

The acquisition of Seasons Home Health, LLC by Jetre A. Schuler

The transaction between Metaphase Design Group, Inc. and Aptar Pharma

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